Priced Out

February 8, 2005

Why would people agree to pay astronomical rents to live in the new apartment buildings and high-rises that are popping up all over the East Village and the Lower East Side? One big selling point is the neighborhood’s world-class live music clubs—except those same new buildings and high rents are driving the clubs into extinction. Luna Lounge and Fez have both announced that they’re shutting down, at least for the moment, and the future of Tonic and CBGB is in doubt.

Robb Sacher and Dianne Galliano co-own Luna Lounge, which is closing its location on Ludlow Street at the end of this month. Their building has been purchased by a developer who’s reportedly planning to demolish several one-story buildings to build a large apartment complex. Luna’s owners would eventually like to reopen the club nearby, and Sacher says their hopes are pinned on a one-story building on Essex Street that’s currently tied up in a bankruptcy proceeding. “We really want to stay on the Lower East Side,” he says, “but there’s absolutely no other building that’s available to us, and I’ve been looking for three years. Landlords don’t want to rent [non-residential buildings] to us; they want a ‘triple A’ tenant, like a bank.”

Luna is currently paying $5,700 a month for 2,000 square feet—an impossibly low rate for Manhattan. So Sacher’s also thinking about relocating to Williamsburg: “We would really prefer to sell beer for $5 rather than $7, which wouldn’t be possible if we opened in Chelsea or the West Village.”

Meanwhile, the owners of Lafayette Street’s Time Café, in whose basement the velvety, cabaret-style room Fez is located, have signed a new lease, and decided to renovate the restaurant; they don’t currently plan to reopen Fez. The club’s final show will be March 17: the Mingus Big Band, the first group that ever performed there. “There aren’t going to be that many spaces left to do this kind of thing,” says Ellen Cavolina Porter, Fez’s booking agent since it opened in 1992. “The economics of these rents and the size of these spaces make it very challenging to try to make money.”

It used to be a lot simpler. When Hilly Krystal started CBGB almost 32 years ago, its monthly rent was $600. But CB’s gradually made the Bowery chic, and new ground-floor space on the legendary punk club’s street now rents for around $55 per square foot. Krystal’s third lease ends this August; a new lease would cost him somewhere between $38,000 and $40,000 a month, in addition to the almost $80,000 a year he pays for liability insurance.

“I pay approximately $20,000 a month now—I can’t pay $40,000,” Krystal says. “I can’t run the club at a deficit. We’d have to charge a lot more for drinks, we’d have to charge a lot more for admission, and I don’t know if it’s worth it to people. If it’s gone, I don’t see that anybody’s going to replace it. We’re not a big moneymaking machine.” He’s thinking about trying to continue, but also thinking about going elsewhere: “I know some people want me to put CBGB in New Jersey, and some people in L.A. want me to move out there.”

Down on Norfolk Street, Tonic is struggling to stay where it is right now—like Luna Lounge, it’s in an old, one-story building in a neighborhood that’s rapidly growing taller. As the Voice reported last week, the club is trying to raise $100,000 to survive in the face of flooding, a sewer-line collapse, and a robbery, and it’s scheduled a series of benefit performances by artists including Yoko Ono, Vincent Gallo, and Devendra Banhart.

“Tonic’s rent has doubled since we opened [in 1998], and our insurance has tripled since 9-11,” says co-owner Melissa Caruso Scott. “There’s activity on our block at night now, and I think our customers feel safer—we used to have rats like crazy on Norfolk Street, and I haven’t seen a rat in two years. But with that comes the challenge: Can we stay in this neighborhood? Where artists used to be able to put on performances in their loft spaces, now high-end restaurants want to move in. It certainly makes it harder to present less-mainstream music. I’m hoping that we’ll be able to work something out and get back on track, but the worst-case scenario is that we get evicted, and at some point we’ll look for another space.”

This isn’t the first time a New York neighborhood has begun to price out the clubs that helped shape its identity, Fez’s Porter points out. “MacDougal Street, where all those great folkies started, used to have a club every 30 yards. All the reasons that people used to have to want to live in the Village don’t really exist here any more. It’s strange and sad to see it all go, but it’s going fast.”